Colombian Peso Falls on Speculation for Increased Dollar Demand

Oct. 25 (Bloomberg) -- Colombia’s peso fell for a fifth
day, its longest losing streak in two months, on speculation
demand for dollars will increase ahead of Cemex SAB’s initial
public offering in the Andean country.

The peso dropped 0.1 percent to 1,817.95 per U.S. dollar,
parings its gain this year to 6.6 percent. The currency fell for
nine straight days in the period ended Aug. 20.

“We still don’t have much information on how much demand
for dollars we could be seeing with the Cemex deal, but it’s
definitely something that the market has started to price in,”
said Diana Guiza, an analyst at Corredores Asociados brokerage
in Bogota.

Cemex, the largest cement maker in the Americas, is
preparing for an IPO of its Central and South America unit in
Colombia. The Monterrey, Mexico-based company said in an Oct. 19
filing that it has taken currency hedges to protect against
declines in the Colombian peso as it plans to use proceeds of
the offering to pay debt in dollars.

Colombia’s peso bonds, known as TES, have been fluctuating
ahead of tomorrow’s policy meeting. The yield on the country’s
10 percent peso-denominated debt due in 2024 closed little
changed at 6.07 percent, according to the central bank.

“Some are still expecting a rate cut tomorrow,” said
Jorge Cardozo, an analyst at Corredores Asociados. “Bonds have
been fluctuating, especially after the rally in the long-end of
the curve.”

Rate decisions will depend on global growth and the
domestic economy, Colombia’s central bank said in minutes of its
Sept. 28 meeting that were published Oct. 12. Policy makers held
the target lending rate at 4.75 percent after two cuts since
June from 5.25 percent.